Commerce Commission celebrates handing $90 million back to customers

The Commerce Commission says it has secured three more settlement agreements with banks, as it prepares to hand over responsibility for the Credit Contracts and Consumer Finance Act (CCCFA).

From Wednesday, the act will fall under the Financial Markets Authority's remit.

The three settlement agreements are with ASB, TSB, and Nelson Building Society, which have all admitted to breaching the responsible lending requirements set out in the CCCFA.

The three lenders failed to have adequate systems and processes to ensure they complied with their obligations under the CCCFA. Any customers affected will receive remediation from the lenders.

"The CCCFA has been a significant function at the commission for the past 20 years and these settlements bookend a successful portfolio of enforcement," Commerce Commission deputy chair Anne Callinan said.

"We've taken action across the spectrum of lenders under the CCCFA, big and small. The constant throughout has been a focus on protecting consumers.

"Through this work to protect borrowers we've gained insights into the hardship some households face, which has helped us understand the impact of our work and make considered and measured choices in what we do."

She said the Commerce Commission had worked closely with the FMA to ensure the transfer was smooth.

"The final settlements we have secured mark the closing of a significant chapter, in which over 20 years the commission took more than 60 cases to court, won penalties and reparations of over $100 million in total, and oversaw remediation of close to $90 million back to consumers," she said.

All three lenders self-reported their breaches.

ASB's related to failing to conduct affordability and suitability assessments when establishing or varying overdrafts, failing to have sufficient systems or processes in place for ensuring the required disclosure was provided for overdrafts and failing to detect and reimburse customer overpayments.

TSB's related to failing to have sufficient and robust processes and controls in place to ensure compliance with the lender responsibility principles and failing to have suitable governance arrangements in place to ensure that its overdraft products were consistently assessed for compliance with applicable lender responsibility principles.

Some of the breaches resulted in borrowers being overcharged and some resulted in borrowers not being sent all the information that TSB should have provided.

Nelson Building Society admitted some interest overcharges, not having adequate systems, processes, and controls to provide continuing disclosure and the required information and documents to borrowers and guarantors when loans were changed, and

failing to conduct proper affordability assessments for 37 migrant workers.